Jacksonville FL Real Estate Update

Beware Short Sale Investor Scams!

Jacksonville, Florida Real Estate

Short Sale Fraud is Becoming Rampant According to A Recent Report from CNNMoney

The following is a true story. The names and minor details have been changed to protect the anonymity of the parties involved. 

WHAT YOU DON'T KNOW CAN COST YOU FINANCIALLY AND EMOTIONALLY!

Recently, we contacted a local home owner in our primary farm market area because we knew that their home had been vacant for many months. The home had been listed about one to 1.5 years ago without selling. We were curious as to what had happened with the listing so we checked public records and discovered that the property had been deeded to an investment group and then deeded back to the original owners about 7 months ago.

Our suspicion was that these investors had tried to flip the property by negotiating a lower than fair market value with the owner's mortgagee (lender) and then turn around and sell for a profit to another buyer without making any improvements to the property.  Don't misunderstand - flipping is not necessarily a scam. It depends on how it is done and if disclosures have been made to all parties involved including the lender holding the mortgage. 

Think about it. The lender holding the mortgage who is willing to accept a short sale wants to get as much for the property as possible. If the "investor" is capable of quickly turning the property for a profit without considerable improvements made between buying and selling then the price he is offering is obviously not in the best interest of the lender. 

Our suspicions were confirmed when we located the home owners via a social networking site.  We sent them a private message asking if they were even aware that they were still the owners of the property and, if so, were they aware of their options at this time and/or would they like a free consultation with us. We received the following response from the home owners. 

 

 

 

Hi Tim,

Boy what a mess did we get ourselves into. When we moved, we truly believed we had sold the house to investors - we even had a closing at an attorneys office. 

Almost 1.5 years later I was served with papers for foreclosure from a mortgage company I had never heard of who indicated in the papers they had no proof of promissory and were asking the judge in the papers to forgive them of this and grant them the foreclosure. We responded ourselves as when we received it was already late. We then went to an attorney who we paid a lot of money to help us, he had an emergency hearing with the judge in his quarters (the judge had signed off of the papers already) He had them retracted and this is on file as well. The attorney then worked with us to get the deed back from the "investors" which is why you see the quit claim deed being put back into my name. He explained we had never really sold the house only turned it over to these people for nothing and were still very accountable for the house.

During this whole time we received no notifications from my true mortgage holder that anything was amiss. We were renting and had not tried to purchase anything so I had no clue anything was really wrong. When we got access back to the house we discovered that the brand new appliances were missing, which no one will admit to removing them. The vessel sinks and new faucets etc were all still in place but the wooden floors have major moisture issues which is because we had a defective installer who didn't put the layer between the wood floors and concrete that is to occur. (another story)

I tried to get a loan modification originally but was told that I had to be delinquent on payments before they would consider it (the payment was up to 2,300 a month). So I held a payment, months went by no answer. Then we put it up for sell which is when the other company contacted us I thought I had done due diligence but I was so mistaken. We were trying to prepare for the possibility of my husband losing his job and being able to live off of my salary alone. 

Since getting the deed back, I have contacted the mortgage company and done all of the paperwork for a deed in lieu -- again months and months have passed with no response to repeated calls and letters. Finally, the last time I followed up I was told the house was going on the auction block in 2 days at that time. I just really am at my wits end with this whole thing. I have searched court records, and can't find where the auction took place and have never received anymore information.

I get notices now about my mortgage for the entire amount of the mortgage with amounts past due so it's very confusing as to whether it did get auctioned or not -- and trying to get anything out of the mortgage company is insane! I am sorry for my neighbors who live right next door to what must be a mess by now, I honestly don't drive by the house. I just can't seem to bring myself to do it because it breaks my heart. I went through so much to have a nice home for my kids and for it to turn out this way it was my little nest egg that I really made some terrible choices in the end.

If you can help us we are VERY open to whatever can be done to help us assist in truly being out of the home and no longer responsible for it.

Thanks for reaching out to us, this has been an emotionally stressful thing to go through.

Linda

 

 

We discovered that the investor group had a member who is also a licensed real estate agent and he listed the property at an inflated price. He led the home owners to believe that by signing the deed over to the investment group, the home owners would be free and clear to move on with their lives. This sounded great to them! In fact, what happened is that when a buyer willing to pay an inflated price (which would have enabled the investment group to make a quick profit) could not be found, they simply dropped out of sight - what the owner didn't realize is that they were still responsible to pay their mortgage but no longer had deed to the property. Not good! 

Now, I am not going to go as far as to accuse these "investors" of fraud since I don't have all the details and I don't know what disclosures were made to all parties involved. I'll simply say that given the information I do know, this just doesn't pass the smell test.

The bottom line is that home owners can save themselves a great deal of stress by contacting us first. As Accredited Consultants in Real Estate (ACRE®) we work with you to explore all your options.  We connect you with other professionals such as real estate attorneys, financial planners, etc. who can provide specific counsel in their areas of professional expertise.  If you decide that a short sale is your best option, we work with you to formulate a plan to quickly obtain the highest price possible given current market conditions.

Follow up to the above story:  After consulting with our real estate attorney, the home owners decided to move forward with a short sale.  We aggressively marketed the property for sale and quickly received several offers and entered into a short sale purchase agreement with the highest bidder.  

If you are in a similar situation or know someone else who is, don't hesitate to contact us. We are happy to sit down with you to discuss your situation and options so that you can make the decision that is best for you and your family so that you can move on with your life.  We are here to help... call us today.

ABOUT THE BLOG OWNER

TIMOTHY H. FENNELL, PA

Tim FennellTim Fennell is a Florida licensed Real Estate Broker with The Legends of Real Estate, REALTORS® in Jacksonville, Florida.

His strong background in business development, real estate investments, counseling and marketing greatly enhance his skills as a Listing and Internet Marketing Specialist. 

Tim and his wife, Susan, have over 30 years experience in Jacksonville Real Estate sales, marketing and investing. Both are Accredited Consultants in Real Estate (ACRE®). When you're ready to be consulted with, rather than sold to, give Tim and Susan Fennell a call.

Visit Authors Website →   

Comment balloon 1 commentTim Fennell • July 24 2011 12:04PM
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